Where to keep $200,000 for two months up to one year

[finnime]

We are planning on selling our house, to buy another at an unknown point in the future when we find something we really like, hopefully in less than a year. In the interim we will have somewhere between $200,000 and $250,000 in cash for a home purchase; the rest will go to an index fund. What would you do with that kind of money for an indeterminate period?

[Opti]

Use it. So, use someone else's advice. 
Happy cold Saturday. 

[NoNamePerson]

I'll be glad to hold it for you           OK did you really expect a serious answer from me??  I have no answer since times changes cause different thinking. Back in the dark ages I put large amounts of money in CD for only the period of time I knew I would not need it. This was money I earmarked for something specific down the road like down payment on house, etc. But rates were awesome back then. It tied it up and kept me from dipping into said money. Just saying from two months up to one year is quite a span. 

[plugginaway22]

I would keep it somewhere pretty liquid so quickly available if the perfect place comes up. My money market account with Capital One pays .30%, which equates to about interest of $15 per month on a $60K balance. Good luck on a quick sale that creates a bidding war and lots of offers!

[qofcc]

Savings account if it's hopefully less than a year. When the right house comes along you'll want immediate access

[jerseygirl]

I just opened an Alliant savings account, has 0.55% rate. Not great but better than the 0.1 most banks give. Look for online banks usually higher interest

[chiver78]

Jan 29, 2022 16:04:01 GMT -5 qofcc said:

Savings account if it's hopefully less than a year. When the right house comes along you'll want immediate access

^this. my parents have about $550k split across two savings accounts at their regular bank. (FDIC insured limits, Mom's choice) from the sale of their house. I'm co-signer on one of the accounts in case something happens to her and I'd end up running Dad's books anyway. 

[finnime]

Huh. So, savings account. Thank you. That actually hadn't occurred to me. I see my credit union offers .1% on savings, but Capital One where we have our joint checking account offers .4%. Better than a kick in the pants, but you are right, it's safer and immediately available.

[TheOtherMe]

finnime  check with your credit union as mine has a type of account for larger sums of money that pays more than their regular savings account.  It still isn't much interest, but it's definitely more than the amounts I get on my many dedicated savings accounts.

[Knee Deep in Water Chloe]

So, we'll have this situation also. 
I do intend to pay off the fifth-wheel loan and two auto loans which will take $50K and should leave us around $175K - $225K. 
Am I going to have to pay capital gains on the house money that I put toward the loans?

[NoNamePerson]

Jan 30, 2022 11:28:19 GMT -5 Knee Deep in Water Chloe said:

So, we'll have this situation also. 
I do intend to pay off the fifth-wheel loan and two auto loans which will take $50K and should leave us around $175K - $225K. 
Am I going to have to pay capital gains on the house money that I put toward the loans?

www.irs.gov/taxtopics/tc701

Don't know if this will answer your question but maybe a jumping off point?

[finnime]

Jan 30, 2022 11:28:19 GMT -5 Knee Deep in Water Chloe said:

So, we'll have this situation also. 
I do intend to pay off the fifth-wheel loan and two auto loans which will take $50K and should leave us around $175K - $225K. 
Am I going to have to pay capital gains on the house money that I put toward the loans?

No capital gains tax on anything realized from the sale below $500,001 if you and your DH file jointly. You can use the funds as you please. IRC, the limit went up when they eliminated the requirement that you roll over gains into new property. Of course, it's all different if you are not dealing with owner-occupied property.

[resolution]

We went the savings account route when we sold our old house and bought a new one. It was a bummer to miss out on so many market gains, but we knew we were spending most of the money on improvements to the new house, and didn't want to lose it in a market downturn right when we needed it to pay contractors.

[The Walk of the Penguin Mich]

What I would do is park maybe $50k where I had immediate access and then take the balance and look for something with a better return than a savings account.  This way you have enough money to make a legit offer on a house and you have some time to get the balance out.

[finnime]

What reasonably safe place that offers a better return do you suggest, The Walk of the Penguin Mich?

[The Walk of the Penguin Mich]

Jan 30, 2022 17:50:40 GMT -5 finnime said:

What reasonably safe place that offers a better return do you suggest, The Walk of the Penguin Mich ?

I’d probably choose a batch of high dividend investments.  Been looking at this for the proceeds from my dad’s house.  The $$ is earning squat in savings.  

[haapai]

This is an intrusive question but there is a reason behind it.

Where are you going to live between selling your house and buying a new one?  Actually, I don't need to know the answer to that question.  The real question is whether your housing costs will go down (or up) during the housing gap and whether you have a plan for what to do with that surplus (or how to handle the shortfall). 

If you are not going to be shelling out nearly as much for housing (and storage) for two months to a year, you'll need a strategy for making use of that cash too. 

[finnime]

Good point, haapai. We will be spending less, but I'm not sure how much less, since we won't have mortgage with taxes and insurance, water and utilities bills for that time. We will have to pay something except for time we spend at my sister's or brother's, but I really doubt it will equal what we pay for living here in the metropolitan D.C. area. Wherever we stay will need to be dog-friendly and we'll need to pay for a storage unit in the area for the interim, too.

[haapai]

You also won't be shelling out for the loans on the fifth wheel and the cars. 

[finnime]

Feb 1, 2022 0:50:37 GMT -5 haapai said:

You also won't be shelling out for the loans on the fifth wheel and the cars. 

That would be Knee Deep in Water Chloe with the fifth wheel, not us. Because she has one she won't need to pay for a place to stay until she finds her next home.

[dippyegg]

I would probably just put in the bank.  Are there 1 yr CD's that might be an option?  Not sure.  Or, you could put that into bonds.